Barry Rapp, with Cal-CO Framing, crawls around rafters while framing a house in the Cotton Woods subdivision north of Durango. Years after the Great Recession, homebuilders say the industry is finally getting itself back on its feet

JERRY McBRIDE/Durango Herald

Barry Rapp, with Cal-CO Framing, crawls around rafters while framing a house in the Cotton Woods subdivision north of Durango. Years after the Great Recession, homebuilders say the industry is finally getting itself back on its feet

The industry hit hardest by the Great Recession is making a comeback. Home prices are increasing, inventory is down and construction companies that hunkered down after the crash are ready to build again.

Single-family home permits – an indicator of future building – in La Plata County are at their highest level since 2008 with 106 filed so far this year, compared with 93 in 2011.

“We had a really strong 2012. Prior to that, it was consistently a struggle,” said Troy Dyer, president of ClassiqueBilt Development and Construction. “There were a lot of remodels prior to 2012, but 2012 saw a new-home market come back to life. So much so that we definitely got some wind in our sails and a breath of fresh air.”

Dyer’s company isn’t alone. The industry as a whole seems to be catching its breath and burying the casualties of the recession, of which there are plenty.

Fewer businesses left in the industry

Dyer described the recession as “flushing the toilet” on the building industry – only strong companies with a solid reputation were able to stay afloat.

The Home Builders Association of Southwest Colorado lost half of its members since 2007 and is just starting to regain them, said Executive Officer Jan Enge. The association booked 17 new members last month.

Because many businesses either left the area or the state, business isn’t spread out among as many builders, and companies are seeing more profits.

About 80 percent of the 2,903 active homebuilders operating in the state in 2006 are no longer in business. Just 616 active homebuilders in Colorado remained in 2011, according to a Hanley Wood Market Intelligence report obtained by The Denver Post.

“If you were a builder 10 years ago, and you’re still in business today, things are looking pretty good because you’ve survived what is arguably the worst period in history for the construction industry,” said Emil Wanatka, president of Timberline Builders.

Those who survived the recession had to be diverse and take on projects they normally wouldn’t have during the building heyday of the mid-2000s.

Wanatka’s company took on smaller projects and started doing remodels and commercial construction. The company also reduced its overhead by laying off six workers and moving into a smaller office building.

Inventory of homes decreasing

The last few years have been a buyer’s market, but that is starting to wane as the inventory of existing homes decreases.

Those looking at a home need to make an offer, or they could see it slip through their fingers.

“Buyers still in the market are finding that if they don’t move quickly, they lose the house they want because so many people are looking at the same house because of the limited inventory,” said Denise Storm, president of Durango Area Association of Realtors.

La Plata County saw a 15 percent increase in the number of homes sold during the first nine months of this year compared with the same period last year, according to the association’s statistics.

Confidence levels are up

Home sales may be up, but construction companies are still cautious, and they’re taking no chances.

More companies require a house be sold before they start construction, said Bob Rule, owner of Cal-CO Framing.

“Not a lot of developers are willing to hang their money out there,” he said.

Rule’s business is mostly in the northern area of the county, and it’s starting to pick up again. Cal-CO built six homes this last summer – double the three homes it built in 2011.

But confidence among builders is blooming with the National Association of Home Builders/Wells Fargo builder sentiment index increasing to 46 in November, up from 41 in October. The index stood at a mere 19 in November 2011.

Some companies are holding off hiring until the federal government resolves the “fiscal cliff” crisis and the economy is seen as more stable.

Bill Robertson, sales manager of Lewis True Value Mercantile, said he may hire three or four more people in the spring if business continues at the current pace.

“But I’m not going to make that investment not knowing if it’s going to come tumbling down,” he said.

One problem for recovering businesses may be finding workers.

Most of the construction workers laid off during the recession have either left the area or gone into another field of work, Wanatka said.

Companies shouldn’t expect new college graduates to fill the need, either. Fewer young people have chosen the field because of the recession, he said.

A 2012 Construction Labor Market Analyzer report predicts a 2 million shortage of workers by 2017.

Building in the future

Nationally, housing starts – newly constructed homes – is expected to come in at 776,000 in 2012, a 164,000 increase compared with the 612,000 starts in 2011, according to a November National Association of Realtors report.

So where are companies going to build these new homes?

Little infill space remains in the Durango urban core, and homes tend to be more expensive in the city than in the county or Bayfield.

Wanatka and Enge predict Three Springs will be the next building hot spot, particularly because of the development’s close proximity to Mercury’s new headquarters next to the Durango Mall.

“Those babies are selling like hot cakes,” Enge said of new homes already built in the development.

Timberline Builders is expected to finish a seven-unit townhome complex in Three Springs this month. Depending on how they sell, there could be more of the townhomes in the future.